The other day we received an email from a reader asking “are you personally bullish or bearish?” Oh boy…

First, and aside from the fact our own “personal” feelings are supposed to have little to do with our market analysis, except insofar as we report in “What We Think” and our “Conclusion,” the easiest answer is that when prices are rising, by definition the sane should be more “bullish” than not.

But second, and this is where an initial caveat resides, there are always degrees of bullishness. By definition, the longer an uptrend lasts, the more likely the odds that a pullback will develop. But that piece of brilliance is hardly a timing mechanism to hang your strategy hat on.

Market Overview – What We Know:

Major indexes were mixed last week. S&P 500 and Value Line index were up a bit with latter closing at new all-time high on weekly basis. Dow 30 and NASDAQ Composite lost ground on week.

Market Volume decreased by nearly 7% compared to previous week.

All cycles, including Minor, Intermediate, and Major, remain positive, but all are also historically “Overbought.”

Daily MAAD created new short-term high last Tuesday, but was unable to better that level over remainder of week and could easily break lower through uptrend in effect since late December with only marginal market weakness. Weekly MAAD continues to hold below late April 2011 high, but was last positioned to threaten on upside long-term downtrend line stretching back to pre-2000 market high.

Daily CPFL hit new short-term high last Friday, but remains well below major resistance created week ending February 25, 2011. Daily CPFL Ratio was “Overbought” at 1.67 while Weekly Ratio was overheated at 1.61.

Cumulative Volume (CV) in S&P 500 was last at new short to intermediate high, but continues to remain weak relative to spring 2011 high, as do NASDAQ Composite and Dow 30.

Which leads us to the third point. If the market has been rising for an extended period of time, but is statistically “Overbought” and few, if any, of the key indicators we use to measure the health of the market have confirmed market strength, then our outlook is necessarily tempered. To draw a distinction, it would be a lot like saying the weather tomorrow will be with bright sunshine and no humidity as compared to another day that should be partly cloudy with higher humidity. There is no rain forecast for either day, but the first day is obviously the most desirable for folks wanting to get some rays.